Why Merge Gets It: Declining Record Sales, P2P and Lame-Ass Excuses

Here's an essay I wrote this week on a few issues I've been thinking about. Hopefully it'll get a few of y'all thinking as well. Have a happy new year and I'll see you this Wednesday, January 4th for the first J's Indie/Rock of 2006!

My favorite independent record store, Gate City Noise, is currently not open. It’s in the process of moving locations so that, hopefully, its owner can make a passable living in the future. That being the case, I find myself wandering into Best Buy, the only truly acceptable big-box retailer, more and more. Their prices are decent and they have a big selection.

I was there with some post-Christmas cash the other day when I stumbled upon something. A small, cardboard encased cd that only had three songs on it. It was by the band Spoon and it said simply “Spoon - Sister Jack” on the cover along with a photograph. I had to rub my eyes a few times before I realized that yes, Virginia, this was indeed a CD single.

Now before I get into why this is important and why I then very happily purchased it, let me set a scene for you. It’s the mid-1990s. The music industry is booming with the recently (as in, previous 5 or 6 years) advent of the CD as the major format for music releases. In terms of millions of units shipped (that means manufactured and distributed, not necessarily sold - this is how Sound Scan, the chart compiling company for Billboard and the record industry, measures its “sales”) in 1995, the industry was sitting at close to 800+, up from only around 650 in 1990. The units would continue to grow until their peak of close to 1.05 billion units shipped in 2000. An increase of 350 million units in just a decade. Between 1973 and 1990 (in which we had the decline of vinyl, the rise of cassettes and so forth) the industry had managed only an increase of 250 million units (from roughly 400 to 650 million). The CD was obviously a big money maker for the industry.

But how to make it even more of a money maker? In the late 90s the industry decided that CD singles just weren’t where their interest lay. They were averaging only around 150 million units shipped a year. If singles were eliminated, wouldn’t consumers then flock more to the complete, LP format? They want the music, right? And that’s what happened. In the late 90s the industry largely ceased production of CD singles and, indeed, for a period of time CD sales did increase, capping out at the aforementioned 1.05 million units in 2000.

Things started to change at that point though and for whatever reason, sales began a sharp decline, winding up back around 800 million units shipped in 2004, the most recent year in which complete data is available. What was to blame for this massive drop off in product shipment? What had happened in the previous 5 or 6 years that could have somehow affected them this way? The answer to those questions for the industry came in the form of a little startup company founded by two guys with nothing better to do than find an easier way for people to share digital files: Napster.

The Napster story at this point is too worn to need to tell over. Peer-to-Peer (or P2P) services were on the rise immediately, spawning lots of imitators with different programs (Limewire, Bearshare. Kazza, Gnutella, etc.) that all allowed people to share, fairly seamlessly, digital music and videos with people all over the globe who simply had the same software. It was an ingenious idea and people took full advantage of it, especially when it came to music. I personally remember long hours in my dorm my freshman year of college, searching for rare, out-of-print music or obscure singles by bands I loved. I even spent a lot of time searching out new bands that I hadn’t heard or old bands I hadn’t heard either in order to see if they interested me. The amount of money I spent on cds that year grew quite largely thanks to Napster and all the new music I found.

But like a lot of things that seem too good to be true, it was. Napster and its companions seriously ruffled the feathers of the industry and some artists who saw it as a major copyright infringement to freely trade protected material. The lawsuits and court orders began to come fast and furious. The result being that P2P survived but only in two forms: ‘illegal’ traditional formats which still operate and the new pay services such as iTunes, Emusic, the new Napster and so on.

Having co-opted the very thing that they claimed to have been the cause of plummeting sales, one would think that the industry would have seen a major recovery. That hasn’t been the case. There are several reasons as to why this is the case: mandated retail prices that are too expensive, consistently sub-standard product (i.e. same, toothless music churned out over and over), etc. My experience at Best Buy the other day has prompted me to focus on the elimination of the CD single as a primary cause of declining sales.

These things were eradicated when the industry ceased producing singles: a product for the consumer who is not a completist and wishes only to have the song they heard on the radio and a product for the consumer who is a completist and seeks to own the additional non-LP music usually provided as ‘b-sides’ for the singles. It’s ironic that one product would simultaneously serve such different ends of the music market, but it’s true. Let’s look at Spoon’s “Sister Jack” single as an example.

The CD single contains the songs “Sister Jack” (the official ‘single’ off of the album and therefore, ostensibly, the song people will hear on the radio - if they’re lucky), “I Turn My Camera On (John McEntire Remix)” (a remix of an LP track done by a person, John McEntire of the band Tortoise, who is probably of interest to completists and people who know the music genre Spoon falls into) and “Sunday Morning Wednesday Night”(a non-LP track that was probably recorded around the same time of the album but didn’t end up on the LP - therefore unavailable except on this single). As a multimedia addition to the CD, there is also the video that was made for “Sister Jack” that will play when you put the CD in your computer CD-rom drive. A certain draw for fans of the song who have never seen the video, or again, for completists.

Completists aren’t going anywhere. They will continue to seek to own things. There’s a certain fetish in the object form of the music (album art, liner notes, etc.) that they have. I’m certainly one of them. However, for the fan of the single song, for the people who actually listen to commercial radio with some frequency and who (back in the day - this is not the case anymore) watch MTV with any regularity, this chance to own a single song and experience another side or two of the band is lost. This, on top of the ‘suggested’ retail prices of anywhere from $16.98 to $18.98 for a CD, has shown the music industry to be completely disinterested in the satisfaction of its customers. Its disinterest in the benefit of its artists is a whole other matter though with similar results.

Independent record labels are the exception to the rule. Merge Records, the wonderful North Carolina label that is home to Spoon, regularly puts out singles for its artists. The singles are well thought out, include great additional music and extras. They are not alone. Singles are still a major force for good and promotion in the independent music scene. Singles are still a great and cheaper way to let consumers try out an artist’s work without forcing them to buy a complete album that they may regret later. Is $5 spent on a single by a band that I eventually decide I don’t like worth it? Sure, since I might’ve bought their $15 full length LP otherwise. Independent labels are consistently devoted to the consumer, the artist and themselves on a more equal playing field. That is not to suggest that independent labels aren’t trying to make a buck, but they are decidedly less frequently out to do so at the expense of the artist. Artist development means something in independent music.

Which brings us back to the problem of declining sales. As the industry struggles with the drop in sales, the disappointing results from cookie-cutter pop artists who are as indistinguishable as meat after it goes through a grinder, when will they return to the idea of investing money in unique, outstanding artists? The days of major labels like DGC investing in bands like Sonic Youth, it seems, are over. The labels have seemed to be in a stylistic rut since the mid-to-late 90s with only a few scattershot gleams in an otherwise dark cavern. Independent labels have continued to invest in some time-worn, but well-tested bands but equally they’ve also branched out into some amazingly unique and un-tested genres, opening up to let the listeners decide what they think.

Whatever the industry decides to do, it’s obvious that things like P2P and pay-for-download services are part of the future and they’ve been a bit slow on the uptake. They’ve also been slow about countering them. The elimination of the single CD format made P2P services perfectly natural. Now you could download the single you wanted and not buy the whole album. How will the industry answer? They’ve made tentative forays into the format, but they have a ways to go to catch up. They’re still insisting on the ridiculous price of around a dollar a song which makes most albums average out to be their traditional $12-$15 price. Forget it. Without a brick and mortar store, overhead, workers to hire, a physical cd, cd-case or any of the artwork or liner notes, paying that much per song is absurd. So chalk up a loss for the industry so far on digital downloading.

There are two exceptions I know of to this rule. The first website has proven itself to be tremendous so far. Emusic offers monthly subscription rates (so much money per month for so many songs downloaded) that average out to roughly 25 cents per song. This makes the average album price closer to $3-$5 dollars. Their website is perfect for people who seek out more obscure, out of print or less well-known music. The Dream Syndicate’s The Day Before Wine and Roses, an early live album of pre-debut album material, is available for download. On the opposite end, more well known stuff doesn’t always appear. Tom Petty was nowhere to be found.

Rhapsody is another service that has a more ideal format. For a monthly subscription, you can listen to anything you can find, in its complete form. On most services, only snippets of songs are available. They will let you listen to anything, as often or as much as you want. You pay additional fees in order to download and burn the songs.

So who knew that one little cd with three songs and a media video on it would make such a statement about the industry as it stands today? All I can say is that Merge, and all the other independent labels regularly producing singles, get it. When do the rest catch up?

Thanks to the following sources for information for this article:

Consumer Federation of America - “Time for the Recording Industry to Face the Music: The Political, Social and Economic Benefits of Peer-To-Peer Communications Networks” - http://www.consumerfed.org/pdfs/benefitsofpeertopeer.pdf

HearUsNow.org - “What’s At Stake :: File Sharing” - http://www.hearusnow.org/internet/whatsatstake/filesharing/